January 31, 2017

Missouri Historic Tax Credit Program Faces Potential Reduction

The Missouri Historic Preservation Tax Credit is offered to revitalize communities throughout the state by incentivizing developers to maintain the integrity of historic buildings. A significant amount of money can be recuperated from costs associated with restoring or renovating qualified property – up to 25%. There are usually annual legislative efforts to reduce or eliminate the credit, and a new Missouri Senate Bill No. 6 was introduced January 18, 2017 in the Missouri state Senate to again reduce the cap. The new legislation would lower the current limit by $20 million to $120 million for the fiscal year beginning July 1, 2017. The bill also proposes a fee of up to 1% of the tax credit for a new Capitol Complex Tax Credit Act.

Learn more about the Missouri Historic Tax Credit.

We will release updates on legislation as they develop. Contact an Anders advisor to learn if your project is eligible for the Missouri Historic Tax Credit.

All Insights

January 26, 2017

2017 Mileage Rate, Minimum Wage and 401(k) Limit Updates

Annual Payroll and Withholding Update Part 1 of 5

This year, Missouri employers will see a $0.05 minimum wage increase and a $0.05 decrease for business miles. Mileage rate, minimum wage amounts and 401(k) limits and thresholds are outlined below in Part 1 of the Anders Annual Payroll and Withholding Update.

Standard Mileage Rate

The standard mileage rate for 2017 will be 53.5 cents per mile for business miles.  The 2017 rate for medical travel and moving costs will be 17 cents per mile.  The charitable mileage rate will remain at 14 cents per mile.

Minimum Wage

The Missouri minimum wage will increase to $7.70 per hour in 2017.  The Illinois minimum wage remains $8.25 per hour.

Employees under the age of 20 can continue to be paid $4.25 per hour during their first 90 consecutive calendar days of employment with an employer except where a higher state or local minimum wage standard applies.  Employers of “tipped employees” must comply with minimum wage laws, but can claim a tip credit against their minimum wage obligation.

401(k) Elective Deferral Limits, SEP and SIMPLE Plan Thresholds

The limitation on 401(k) elective deferrals in 2017 remains unchanged at $18,000.  The catch-up contribution limit for employees aged 50 and over who participate in the 401(k) remains unchanged at $6,000.

The compensation an eligible employee must have in order to be a SEP participant remains unchanged at $600.

The maximum employee salary reduction contribution to a SIMPLE plan remains unchanged at $12,500.  The catch-up contribution limit for individuals aged 50 and over who participate in the SIMPLE plan remains unchanged at $3,000.

Contact an Anders advisor with any questions on how these amounts affect you.

All Insights

January 23, 2017

Tax Filing Deadline Changes for 2017

Now that year-end planning and execution is behind us, it’s time to perform year-end closing procedures and reconciliations of banks, credit cards, fixed assets, etc. This year, the IRS has made several due date changes that you need to be aware of to make sure you are in compliance.

January 31st – 1099s/year-end payroll filings. These informational return yearly filings have historically been due to recipients by January 31st, and if you electronically filed these forms, you had until March 31st to submit to the IRS. This year, however, the filings are due to both the recipients and the IRS by January 31st, regardless of filing electronically. The main reason for this is to allow the IRS to receive the information earlier and hopefully lower the number of fraudulent returns filed through matching.

March 15th – Historically, C Corporations and S Corporation tax returns were due on this date. Beginning January 1, 2017, S Corporation and Partnership tax returns are due March 15th.  So, all flow-through tax returns are due by March 15th, one month before the individual filing due date and more time to receive the necessary K-1s to file individual tax returns.

April 15th – Historically, Partnerships and Individual tax returns were due on this date. Beginning January 1, 2017, C Corporation and Individual tax returns are due April 15th. As mentioned above, moving the flow-through tax return due dates up to March 15th should allow more time for individuals to file their tax returns since they will be receiving K-1s early, and since C Corporation returns do not affect individuals, they are now due April 15th.

If you file a partnership tax return, you should begin planning for this due date change now in order to gather all documents in advance of March 15th, or be prepared to file an extension. And while generally, no federal tax is due with partnership tax returns since they are flow-through, most companies wait to pay their employer retirement match until the due date of the tax return, so that would now be due one month earlier. This could create a cash flow issue if it is not planned for.

Contact an Anders advisor now to start working on what you need to do to get your returns filed so you can move on to tackling current year planning.

All Insights

January 18, 2017

Shriners Hospitals for Children Selected as 2017 Charity of Choice

2017 Charity of Choice - Shriners HospitalAnders partners and staff have selected Shriners Hospitals for Children – St. Louis as the firm’s 2017 Charity of Choice. Now in its 12th year, the Charity of Choice program combines fundraising activities and volunteer efforts to support one local charity each year. Charities are submitted by members of the firm, and all members of the firm, from interns to partners, have the opportunity to vote for their choice at the firm’s meeting each January. In 2016, Anders raised more than $15,700 for Stray Rescue of St. Louis.

Shriners Hospitals for Children – St. Louis was nominated by the Anders Marketing Coordinator, a former patient. Since 1924, Shriners Hospitals for Children – St. Louis’s board-certified surgeons and staff have been providing high-quality pediatric orthopedic care to children, regardless of the families’ ability to pay. The hospital and clinic specializes in treating children with orthopedic conditions in an environment designed to put children at ease.

While events such as dress down days, penny wars and volunteer days are held throughout the year, the first major Anders fundraising event will be the annual “Hoops for Hope” NCAA basketball pool, which draws participation from clients, colleagues, referral sources and friends of the firm from all over the country.

In addition to Shriners Hospitals for Children – St. Louis, other beneficiaries of the Anders Charity of Choice program have included Stray Rescue of St. Louis, Friends of Kids with Cancer, Basket of Hope, Young Friends of Habitat for Humanity, Nurses for Newborns, Girls on the Run, St. Louis Crisis Nursery, Lafayette Industries, KidSmart, Re-Building Together and Kids Under Twenty-One (KUTO). Anders has raised over $250,000 in the past twelve years.

Learn more about Shriners Hospitals for Children – St. Louis.

All Insights

January 17, 2017

Utilizing Your Startup’s Equity

An idea is the basis of any new business, but control of and ability to profit from the idea is just as important. This is where equity comes in. Equity represents this control and profitability, and should be the second thing on every entrepreneur’s mind after the idea. Equity is a tool often utilized by a startup to further the business goals of the company. Keeping track of equity and putting it to work for you are two integral parts of creating a successful business.

Keeping Track of Your Equity

How can you use something that you don’t keep track of? Capital tables and professional involvement can help track equity and ensure you’re making the right decisions for your business.

Capital Tables
A capital table, or capitalization table, is one of the easiest ways to keep track of equity. It’s a spreadsheet that records major shareholders of the company, what proportion of total capital these shareholders control and the amount of funding initially received for the capital. tThese tables are typically organized in chronological order of the equity’s acquirement.

Professional Involvement
When deciding how to put your equity to work, it’s very important to understand the legal and tax consequences of your actions. A CPA and an attorney can help you navigate these issues. Because equity changes can have unique tax ramifications, your CPA can help you structure equity deals to either reduce or delay the tax burden of the transaction. These equity deals can involve either direct investors or employees who have received equity-based compensation.

An attorney should be involved with equity deals to minimize the risk of legally-binding contracts having unintended future consequences. Whether it’s the operating agreement under which the company will function, or a convertible debt agreement with a venture capitalist, it’s important to protect the equity that controls your business. This protection can only be maximized through the services of a high-quality licensed attorney.

Putting Equity to Work

Equity is a tool primarily used to acquire assets in exchange for some portion of company control. These assets can take many forms, such as cash to fund large purchases or loyalty of employees who are essential to business operations. How can you leverage one of your most important assets?

Equity-Based Employee Compensation
Bill Harris, one of the initial executives of PayPal, emphasized the key role that equity can play in employee compensation and retention. “The people you want to attract to your business are the people who want equity. You need people who are willing to take risks. And then you need to reward them.” Equity can create dedication and loyalty from important employees, while also keeping cash in the company.

There are two ways to grant this equity-based compensation: capital interest and profit interest. A capital interest results in an employee having a claim on a set portion of the company’s assets. A profits interest entitles the employee to a portion of the future income or increase in company value. The tax consequences of these different compensation types are unique and should be discussed with a CPA.

Fundraising with Equity

Direct Investment

The simplest way to fundraise through equity is through a direct equity investment. This avenue is common and necessary in many cases, but it is very important to understand the consequences of an equity transaction:

  • Equity investors expect rewards for their risk
  • Competition for equity investment is high
  • Raising the equity takes time
  • Once the equity is given up, that investor has some control

Convertible Debt

This equity-debt combination involves borrowing money from investors that will either be repaid with cash or equity in the company. The specifications of this transaction are usually set out in a loan agreement, which should be reviewed by your CPA and lawyer to ensure that all of the terms are addressed and appropriate. Understanding the conditions of these agreements can avoid uncertainty in a company’s equity picture. That being said, this is a useful tool if you are unable to accurately value your company at this stage, or you believe that the valuation will increase rapidly with the influx of capital from the loan.

Typical clauses of this agreement are:

  • Valuation caps – a maximum equity valuation at which the investor can convert to equity
  • Equity discounts – a discounted value of the amount of equity the lender can convert to from debt during the next round of equity investment

Convertible debt is typically accompanied by a reduced interest rate due to the investor’s additional flexibility gained by the equity conversion option.

Equity is an important part of your growing business and should be utilized and monitored like any of your other important assets. A greater understanding of equity and your options involving equity is an important tool to ensuring that your company reaches its potential.  For more information on equity options for your company, please contact an Anders advisor.

All Insights

January 17, 2017

LEA Manufacturing Outlook Survey Shows Despite Industry Headwinds, U.S. Manufacturers Are Optimistic and Expecting Revenue Growth in 2017

Anders and Leading Edge Alliance (LEA) are jointly releasing the results from the 2017 LEA National Manufacturing Outlook Survey. With more than 250 participants, this survey report contains the expectations and opinions of manufacturing executives in more than 20 states across the country producing a wide variety of products.

Results from the survey include:

  • 74% of small manufacturers and 69% of large manufacturers expect revenue to grow in 2017.
  • Manufacturers are more optimistic about their local/regional economies than the national or global economies.
  • The top priority for manufacturers in 2017 is “cutting operations costs”, however, high-growth manufacturing respondents are more focused on “research and development”, with 12% of high-growth respondents reinvesting more than 10% of annual revenue.
  • Labor continues to be a challenge for manufacturers with 67% of respondents expect labor costs to “increase” and an additional 7% expect labor costs to “increase significantly” in 2017.

Leading Edge Alliance - St Louis CPA FirmAnders Main_640x480

 

 

 

Strategic manufacturers should have ongoing conversations with all of their advisors, including their accounting and tax provider, as to how to overcome these challenges and achieve their business goals. Please contact an Anders advisor with any questions, or learn how our Manufacturing and Distribution services can benefit your business.

Complete the form below to receive a copy of the LEA Manufacturing Outlook Survey results.

 

 

All Insights

January 10, 2017

Help Your Business Take Flight with Accounting in the Cloud

Whether you are a startup, emerging business, or have a long history, automating your accounting functions can help your business achieve lower costs and higher profits. Cloud-based systems deliver comprehensive services, typically at a lesser cost than more traditional accounting services. The points below can determine if cloud accounting would be a good fit for your company.

Is your business:

  • Looking to replace a bookkeeper/accountant or having difficulty keeping one?
  • Missing essential data needed for effective reporting and decision-making?
  • Needing financial data on a real-time basis?
  • Expanding its footprint by adding new locations?
  • At risk for fraudulent activity?

If any of the above apply to your business, Anders Cloud Accounting Services can provide solutions to your financials, with less paper and easy tracking. Automating accounting processes with cloud-based systems can benefit companies of all sizes by providing:

  • Advanced functionality by optimizing automation
  • Ability to view all expenses tracked in real-time for complete accountability
  • Peace of mind that comes with additional security
  • Improved analytics to give a complete picture
  • Results delivered quickly and seamlessly
  • Scalable solutions for any size business

Don’t let inaccurate or slow data reporting affect your business. Learn more about Anders Cloud Accounting Services or contact Anders to find out how your company can benefit from optimized, automated accounting in the Cloud.

All Insights

January 9, 2017

New Electronic Form I-9 Requirements and Increased Penalties Coming

A new, electronic version of Form I-9, the Employment Eligibility Verification Form, was recently published by The U.S. Citizenship and Immigration Services. Federal immigration law requires that US employers ensure proper completion of the Form I-9 for each employee they hire. Employers may begin using the new form immediately, but are required to use it after January 21, 2017. The penalties for non-compliance dramatically increased recently as well, making it critical that employers become familiar and comply with the new form.

Form Changes

The new form is available as a PDF document, and includes innovative “smart” features to simplify the completion process for employers and employees. New features include drop-down menus, hover text, and real-time error messages.

However, whether filling out the electronic or paper version of the new form, employers are still required to sign a printed version and retain a hard copy.

Increased Fines for I-9 Non-Compliance

A revised fine schedule for I-9 violations took effect August 2016, implementing significantly higher civil fines against employers who commit certain immigration-related offenses. For each Form I-9 paperwork violation the fine range nearly doubled to $216–$2,156.

New Penalty Ranges for Common Violations

  • Form I-9 Paperwork Violation: $216 – $2,156 per violation
  • Knowingly Employing Unauthorized Workers: $539 – $21,563 per violation
  • Unfair Immigration-Related Employment Practices: up to $17,816 per violation
  • Document Abuse: $178 – $1782 per violation

Employers can view a table of all new fines for immigration-related offenses.

Although the increase in fines took effect August 2016, these fines apply to all Form I-9 violations that took place after November 2, 2015. Therefore, employers should now review their Form I-9 records to ensure compliance with the law. Contact an Anders advisor if you have any questions about the new I-9 form or compliance requirements.

All Insights

January 9, 2017

How to Pay Your Bill Online

Anders clients can pay their bill online using a computer. At the top of your screen click on the “Client Payments” link in the gray box next to “Client Log-in”, or click here to pay online. You will need your client user ID and password.

Please note that online bill pay is not accessible on mobile devices.

 

All Insights

January 3, 2017

Avoid Unnecessary State Tax Burdens with a Nexus Study

If your company does business online or operates in multiple states, then nexus probably isn’t a new term to you.  However, states are continuously changing their definitions of nexus. These changes create the need for a nexus study, which can help a company understand its connections to states and the resulting compliance requirements.

The Rise of Nexus

Nexus is created in a state when a business has some type of connection or presence in that state, subjecting it to state income taxes and/or sales taxes on business done there.

Before the boom of e-commerce, presence within a state was a simple determination.  Due to the sophistication of technology and the rise of online retail, states have defined new ways to trace a company’s presence.  Each state has its own definition of nexus, and many states are making changes to that definition in order to maximize their collections of sales and income taxes.

Various Nexus Types

There are several different types of nexus to consider:

  • Physical nexus
  • Economic nexus
  • Substantial nexus
  • Affiliate nexus
  • Click-through nexus

Our previous post goes in depth about the different types of nexus.

Companies are now at a higher risk of non-filing exposure, as the owners may be unaware of filing requirements for certain states in which a nexus-triggering activity occurred.  Nexus-triggering activities may include anything from payroll expenses and gross receipts, to business licensing and telecommunications tax filings.  For these reasons, it is important to consider a nexus study so that your company remains in compliance with state laws.

Why a Nexus Study

A nexus study involves the investigation of all records and activities generated from the business in each state in relation to the applicable state nexus standards.  It provides assurance that a company is aware of all activities that create nexus, and that the company is complying with all filing requirements. Nexus studies also help mitigate tax exposure and limit liability so you are paying only what is necessary. The State and Local Tax (SALT) Services Group at Anders will perform research to determine if and where nexus exists, and the proper compliance that is required. View our Nexus Study Cheat Sheet to learn more, or contact Anders to determine if your business could benefit from a nexus study.

All Insights

Keep up with Anders

Want to keep up with all the latest insights from Anders? Subscribe and receive the information that matters to you.

  • This field is for validation purposes and should be left unchanged.